For the largest U.S. banks, the best possible result from today’s New Hampshire primary would be an end to Jon Huntsman’s candidacy.

Let me be clear. I don’t believe that Huntsman has a real chance to win the Republican nomination, even if he surges to a strong finish tonight.

But each day that he stays in the race promises another news cycle for coverage of his campaign. In particular, it means more attention to Huntsman’s promise to break up the megabanks.

And over the long term, that has the potential to alter the political dynamics of an issue that has widely been seen as a left-wing cause.

In politics, as in the rest of life, we rely heavily on heuristics – simple techniques for finding answers to complex questions.

So during the financial-reform debate of 2009 and 2010, here is how a sensible voter – or, indeed, anyone who is not a financial policy wonk — might have thought about the idea of breaking up the largest banks.

1) Congressional Republicans are against the idea.

2) President Obama — who many in the GOP consider a dangerous socialist, but who portrays himself as a sensible moderate — also opposes the idea.

3) Vermont Sen. Bernard Sanders, a self-described socialist, is one of the idea’s most prominent supporters.

Q.E.D.: Breaking up the big banks is a radical left-wing goal.

Now by contrast, consider what a similar voter might know about Jon Huntsman.

He is the most moderate Republican candidate for president, but he is also pitching himself as a fiscal conservative. He comes across as a member of the establishment — a former Utah governor and a former U.S. ambassador to China. He supports conservative stalwart Rep. Paul Ryan’s plan to reform Medicare.

So when Huntsman sells a break-up of big banks, the idea instantly has more credibility with moderates and conservatives than it ever had before. And he’s tailored his pitch directly to conservative voters.

“As president, I will break up the big banks, end future taxpayer bailouts, and restore capitalist principles – competition and creative destruction – to our financial sector,” Huntsman wrote in an op-ed Saturday.

Huntsman also argues that the funding advantage that results from being considered too big to fail amounts to a taxpayer subsidy, which undermines free competition.

“This funding subsidy amount to at least 25 basis points and perhaps as much as 50 basis points, or between one-quarter and one-half of a percentage point. In today’s markets, this is a huge advantage,” Huntsman’s website reads.

“Eliminating subsidies would encourage the affected institutions to downsize by selling off certain operations or face having to pay the real costs of bailouts. Removing the taxpayer subsidies that create too-big-to-fail will also strengthen local and community banks which are unable to compete with the subsidized megabanks.”

Huntsman has put forward six specific ideas for making big banks smaller — capping bank assets as a percentage of GDP; capping leverage relative to GDP; imposing a fee on banks whose size exceeds a certain percentage of GDP; revising the system of deposit-insurance premiums to better reflect the risk in bank portfolios; strengthening capital requirements far beyond what is envisioned in the current Basel accord; and exploring reforms under consideration in the United Kingdom.

At this point, I hesitate to call this an actual plan. Huntsman has promised only that as president he would work with Congress to implement one or more of those six ideas.

But the details don’t really matter right now. What matters is that a Republican presidential candidate — a man who routinely gets described as sensible and centrist — is calling for a break-up of the big banks.

I recently asked Democratic Sen. Sherrod Brown of Ohio about his goals for 2012, and he told me that he is interested in revisiting legislation he proposed in 2010, with only Democratic co-sponsors, that would put size and leverage caps on financial institutions.

Brown is a populist progressive with a sometimes unruly mop of curly hair. He would probably serve his agenda better by keeping quiet for now, and leaving the floor to the Republican presidential candidate who looks a bit uncomfortable when he’s not wearing a tie.

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There was plenty for banks to be encouraged about in the Federal Deposit Insurance Corp.'s most recent Quarterly Banking Profile, which reported comprehensive industry earnings for the fourth quarter and all of 2014. Community bank lending is showing steady growth, capital levels keep rising and the FDIC's insurance reserves are stabilizing. But the numbers also contained worrisome signs. Here are key takeaways from the report.

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Comments (6)

If nothing else, Huntsman appears to have won himself the community bank and credit union vote. Alan Kline, online news editor, American Banker

Posted by klinea | Tuesday, January 10 2012 at 1:21PM ET

Mr. Wack:

As a small government, conservative Republican, who supports cutting the deficit $1B next year, not over 10 years, and who wants to protect the taxpayer from exposure, who opposed the Bailouts, who opposes crony capitalism and Congress picking winners and losers, who believes losses should all be private in a free enterprise system, not socialized; who recognizes nearly all the New Deal programs and LBJ's Great Society have failed; and that understands this country's politics today is really a struggle between Western Europe socialism and the 250 year history of capitalism in America....I too would still break up the TBTF banks that violate capitalistic principles. The big banks are not monopolies, but they are so large that they can damage the country...ie. Secretary Paulson points to Congress. We do not want that again; no way to regulate around(just ask the professionals)....they need to be broken up to actually fix the systemic risk...do a tax free split off by lines of business; then have their managers split up; make sure none of the NEWCO's itself is TBTF; let them all compete with one another.What is so bad with this? As a liberterian I am against most government intervention, but there is some proper use of government. From a military viewpoint, if we knew their was bomb under the City of Wash DC, would we let our military diffuse it before it went off?

Posted by countrybanker | Tuesday, January 10 2012 at 3:03PM ET

If Huntsman performs well tonight in New Hampshire, it will be interesting to see if some of his ideas catch on more broadly. There's little chance that Mitt Romney will embrace this proposal -- a lot of big banks are large donors to his campaign -- but others in the race might echo it. It's easy for voters to understand and may prove politically popular.
Rob Blackwell, Washington Bureau Chief, American Banker

Posted by rblackwe | Tuesday, January 10 2012 at 3:08PM ET

wow, what's with the ending to this article...why the slam on Senator Brown? That was a bit uncalled for.

Posted by tiffany1 | Tuesday, January 10 2012 at 3:26PM ET

Tiffany, I didn't intend this as a slam on Sen. Brown - or as a slam on Gov. Huntsman, for that matter. I was trying to draw a contrast between the two that was meant to illustrate my larger point about the cues that voters use to make inferences about the issues. Kevin Wack, Capitol Hill reporter, American Banker